Tech Unicorns Are Going Public at Near-Record Pace

By Corrie Driebusch

The reign of the unicorn IPO has commenced.

Investors gripe that highly valued tech companies are eschewing the public markets and opting to remain private for longer. But in 2018, to little fanfare, 38 tech and internet companies valued at $1 billion or more at the time of their IPO listed shares in the U.S., the most to do so since the height of the dot-com boom in 2000, according to Dealogic.

That is expected to rise next year, according to bankers and fund managers who follow the IPO market. In 2019 some of the hottest names among the tech unicorns, including Uber Technologies Inc., Lyft Inc. and Slack Technologies Inc. are considering IPOs.

Also widely expected: many lesser-known software companies that tout private valuations between $1 billion and $5 billion. These less commercially recognizable companies have made up many of the 2018 unicorns, and for that reason haven’t gotten as much attention as higher-profile firms, according to some analysts.

“These are stories people don’t know well because they’re not an app on your phone,” said David Ethridge, U.S. IPO services leader at PwC. “But there’s a very steady pace, and there’s been a strong IPO market that’s supported this.”

“The question is, ‘What about 2019?’ and that will take some guts and courage, but I think a lot of companies will make the decision to go public even with the difficult market,” he added.

If 2018 is any indication, next year’s class of tech unicorns should perform well even if the broader market is rocky. Shares of newly public tech companies that were valued at $1 billion or more at the time of their IPO are soaring, even in a down market. So far this year, tech companies valued at a minimum of $1 billion at the time of their IPO are up 8% from their IPO prices through Monday. Overall, tech companies that went public in 2018 are up 3% on average, while the S&P 500 is down 4.8% in that period.

Among the unicorns to test the public markets in 2018 was Dropbox Inc. The data-storage company priced its IPO above initial expectations in March. Its valuation at the time of its offering topped $9 billion but failed to surpass the $10 billion valuation private investors gave it in 2014. Shares are up about 2% from their IPO price.

One of the big unicorn winners this year has been electronic-signature technology company DocuSign Inc. The company went public in April at $29 a share. Its shares closed Tuesday at $41.87.

Many of the tech companies that listed shares in the U.S. were based in China, including some of the largest IPOs of the year, such as online-entertainment services company iQIYI Inc. and Chinese e-commerce company Pinduoduo Inc.

Pinduoduo priced its American depositary shares at $19 apiece, the top end of the expected range, in its summer IPO, notching a valuation of more than $20 billion. At that level, it topped the $15 billion valuation it reached in a private financing round before its initial public offering. Pinduoduo’s shares closed Tuesday at $23, up more than 21% above its IPO price.

Of course, there is no guarantee of strong performance, and some big recent IPOs have struggled. Last week, Tencent Music Entertainment Group priced its IPO at the low end of its expected range. While shares of the music-streaming company, which notched a valuation of more than $20 billion in its IPO, rose on its first day of trading, they have since fallen below their IPO price of $13 apiece.

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Write to Corrie Driebusch at